HIGHLIGHTS

Another good global cereal crop is anticipated in 1997. If current forecasts materialize, 1997 world cereal output would be sufficient to meet the anticipated consumption requirements in 1997/98 and may allow for a further modest replenishment of cereal stocks. Nevertheless, the global stock-to-utilization ratio may only approach 16 percent and thus would remain below minimum safe levels.

Food emergencies persist in 29 countries worldwide, mostly in Africa. Serious difficulties persist in the Great Lakes region and in the Horn of Africa due to civil strife, large population displacement and reduced crops. In Asia, a grave food problem is developing in the Democratic People's Republic of Korea. In the CIS, the food situation is worsening in Tajikistan where the incidence of acute malnutrition is increasing.

FAO's latest forecast puts 1997 cereal production at 1 887 million tons, close to the 1996 record crop and above trend for the second year in succession. Assuming favourable conditions until harvest, wheat output is forecast at 583 million tons and that for coarse grains at 926 million tons, while output of rice is tentatively forecast to remain virtually unchanged from the previous year's level at about 377 million tons.

FAO's first forecast for world imports of cereals in 1997/98 is 197 million tons, 4 million tons up from the estimated volume in the previous year. The bulk of the increase is expected in imports of wheat which are forecast to rise 3 percent to reach 93 million tons, while coarse grain imports are anticipated to increase only marginally.

Wheat export prices have fallen back after an upsurge in late April, but remain sensitive to changes in prospects for the 1997 crops. Overall, average prices are some 30 percent below last year's. Maize prices have steadily weakened in recent weeks due to lack of import demand, and now stand 40 percent below last year. Rice prices strengthened in May, although as for other cereals they remain below last year's level.

Oilseeds consumption growth has outstripped that of production in 1996/97, and stocks are expected to be drawn down. Reflecting the continuing tight supply situation, prices remain at relatively high levels. For 1997/98 early forecasts point to some improvement with larger output and some stock replenishment expected.

FAO estimates world sugar production in 1996/97 at 122.5 million tons, slightly less than the record output in 1995/96. Although consumption is forecast to increase by over 2 percent, to 120.6 million tons, production would be in surplus again in 1996/97. This, coupled with the already high stock-to-consumption ratio, is expected to keep prices under pressure in the near term.